Many governments have successively issued loose policies to guide house purchase consumption from reducing the proportion of provident fund loans, relaxing pre-sale funds and encouraging house purchase. We expect that under the framework of urban implementation, the policy side will maintain a marginal improvement trend.
Affected by the decline of profit margin and impairment provision, the performance of many real estate enterprises decreased significantly. Among the key real estate enterprises, the performance forecast net profit of OCT, Jiangsu Zhongnan Construction Group Co.Ltd(000961) , Risesun Real Estate Development Co.Ltd(002146) decreased significantly by more than 70% year-on-year. The net profits of Yango Group Co.Ltd(000671) , China Fortune Land Development Co.Ltd(600340) , Sichuan Languang Development Co.Ltd(600466) three real estate enterprises have changed from profit to loss, and the loss scale is large. We believe that there are three main reasons for the downward performance of real estate enterprises in the past 21 years; First, the tight capital chain has dragged down the construction progress, making the completion and delivery progress less than expected, resulting in the decline of the total settlement income; Second, the 17-18 years of high price settlement gradually, and the gross profit margin continued to decline, resulting in the reduction of settlement quality; Third, weak market demand and strong wait-and-see mood. The expectation of falling house prices leads to the provision for falling prices and impairment losses of inventories.
At present, the valuation center of the industry has been repaired. At this stage, the rebound logic of the sector is still mainly based on the expectation of policy relaxation. The strength management after the direction is confirmed will still have a strong correlation with the upward space of the sector. Under the background of steady growth, we believe that the strength of policy release will be strengthened step by step, and we do not rule out non hot cities to break the shackles of excessive regulation in the past, The subsequent industry fundamentals are expected to usher in recovery with the gradual improvement of policies. For real estate enterprises, although the downward trend at the performance level is difficult to reverse, the substantial improvement of the gross profit margin of land acquisition in 2022 can still be expected. In the future, with the reconstruction of the industry pattern and development model, the operation and management efficiency and credit acquisition ability of real estate enterprises will be the key factors in the medium and long term. The accelerated liquidation within the industry means the emergence of opportunities to improve the concentration, We suggest paying attention to real estate enterprises with relatively stable operation and finance, and continue to recommend China Vanke Co.Ltd(000002) (00000 2. SZ), Poly Developments And Holdings Group Co.Ltd(600048) (600048. SH), Gemdale Corporation(600383) (600383. SH), China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) (001979. SZ) and China Overseas Development (0688. HK).
